Target (TGT) - Get Report has remained open during the coronavirus pandemic while most retailers have closed, and analysts at BMO Capital see the company emerging from the economic shutdown in an even stronger position.
The firm upgraded Target shares to outperform from market perform while raising its price target to $125 from $115.
"[Target's] market share trends in discretionary categories are poised to accelerate in a post-covid-19 retail landscape as competitor closures (specialty, mall-based, and possibly, local independent retailers) accelerate and/or, at a minimum, competitors emerge from this pandemic in a higher leverage situation," analyst Kelly Bania said.
BMO Capital analysts identified 15 of Target's largest apparel and home retailer competitors. The firm found that most were already facing challenging trends and were in the process of closing stores ahead of the pandemic-induced shutdown.
While the government is providing a lifeline for struggling retailers through its relief packages, BMO said it assumed those retailers would emerge from the pandemic with significantly higher leverage.
Those highly levered positions in turn could hurt those retailers' ability to invest in stores, innovation, digital capabilities and in-store experiences.
Target "is well positioned to capture incremental sales from these retailers over time, given its positioning as more fashion-oriented than some competitors," Bania said.
Bania notes that the closing of Toys R Us/Babies R Us and Victoria's Secret's exit from the swim category led to sizable share gains in those categories for Target.
Target shares were at last check off 0.9% at $107.39.